Welcome to the Friday edition of the HOT BARN REPORT
Heard ONLY on American radio stations across the nation and online at hotbarnreport.com!
Karina Jones, Field Director for R-Calf USA joins us each Friday from her ranch in the heart of Nebraska covering new and important cattle industry news and policy.
The problem is STILL the problem! Welcome to this special Friday edition of Hot Barn Report!
It is really fun to watch this feeder calf market build with the strength that has been badly needed. It is exciting to watch the fat cattle market heading north of $1.50. Gross receipts of cattle sold is going to be strong and that is what some will push as the narrative.
But as we are winding down to the end of the year, the day of reckoning is coming. If you don’t keep up with your monthly or quarterly book work you may or may not be shocked at what your bottom line ends up looking like. That healthier than usual calf check that most people are cashing has given the disillusion that all is well in Candyland, and probably bought the silence of many because it just feels so good to walk out of that auction barn and feel like you have been fairly rewarded for a year’s worth of work. BUT the danger of only considering your gross profit is the fact that it is not a reliable measure of your ranch or operations performance. For that we have to look at the net profit, the profit left after paying all your expenses.
I think most everyone would agree with me that cattle prices have not risen with the same proportion that diesel fuel and other inputs have risen. So when the dust settles at the end of 2022, will we really be any better off that we were in 2019-2021? Or are we just going to be happy to have more gross profit to cover the overly inflated input costs we have had to endure this year?
And this is where we have to remember that THE PROBLEM IS STILL THE PROBLEM! We still have an extremely concentrated fat cattle market that has 85% of our cattle tied up in captive supply. I’m still not sure what adding more capacity will do with a dwindling domestic herd? Are these new plants going to fight over the 15%? Remember, THE PROBLEM IS STILL THE PROBLEM!
The last few years have left cattle producers short on equity to reinvest in repairs and upgrades to equipment that have been badly needed. I’m not sure there will be enough left in the gas tank at the end of 2022 to make those investments either. So don’t let these strong calf prices squelch your interest in fighting and demand the reforms that the cattle industry has to have. Infact, consolidation in all ag sectors is what is causing us financial harm!
It will start raining again someday and there might be some optimism that shifts toward rebuilding our cowherd. What are we going to do, cuss the rain and hope that we stay in a drought a while longer to keep squeezing our cow inventory? NO, Lord, NO, don’t cuss the rain when it comes. Remember RIGHT NOW that THE PROBLEM IS STILL THE PROBLEM! Don’t let this year’s calf check be a shiny distraction to buy your silence because I think your net profit at the end of the year will talking back to you saying, “We still have problems!”
Monte will be back on Monday with the news from these Hot Barns that support the American cattle industry: Stockmens livestock, Lemmon livestock, North Platte Stockyards, St. Onge/Newell, Platte Livestock Market, Tri County Stockyards, Torrington Livestock, Creighton Livestock Market, Bassett Livestock Auction, Mobridge Livestock, Ogallala Livestock Auction Market, and Presho Livestock. Catch them all on CattleUSA.com.
This Week on CattleUSA.com
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